A ready reckoner for startups looking to navigate the compliance landscape.

Authors: Sreshtha Majumdar, Trisha Ghoshal, Ankur Sohanpal, Supriya Sharma, Ayush Verma

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The Startup Compliance Toolkit is a practical guide for early-stage Indian startups navigating the complex landscape of regulatory requirements. Designed explicitly for early-stage Indian startup founders, legal teams, and anyone involved in a startup's operational and compliance aspects, it outlines essential compliances—focusing on Private Limited and Limited Liability Partnership structures—alongside information on government recognition, recommended contracts and insurance, and several relevant compliances under various statutory acts related to labour, data, intellectual property, and taxation.

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The toolkit is structured in the following manner. It starts with information on legal structure identification, progresses through compliances to note and enlists benefits of startup registrations. Finally, it closes with key operational necessities to consider for startups.

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Note the disclaimers regarding the document's limitations and the need for professional legal advice.

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DISCLAIMERS

• The information provided in this document is not exhaustive. Therefore, it is important to refer to additional sources for more comprehensive insights.
• Since laws, policies, and schemes are frequently updated, it is important to verify any new developments.
• Although we have tried to cover all general compliances for startups according to Central laws, we have not addressed State laws. Thus, it is essential to check state laws, especially regarding subjects under the concurrent and the state lists of the 7th Schedule of the Constitution. Some of the subjects like employment, shop registrations, trade licenses, trade unions, stamps, land, etc. fall under the Concurrent list. Thus, it's important to check the state laws with respect to those subjects.
• Sector-specific legislations are not included in this toolkit, so startups reading this should ensure that they have obtained licenses, registrations, and certifications under the relevant statute and are in compliance with the reporting requirements thereunder.
• The procedures mentioned here are subject to change and new additions. Therefore, it is advisable to consult with lawyers or other professionals to ensure accuracy and compliance. </aside>

The rise of startups in India has gained global attention, placing the country as the world's third-largest startup ecosystem, after USA and China. Projections indicate a significant growth trajectory, with the number of technology startups expected to increase from 68,000 in 2023 to 180,000 by 2030. Despite the favourable startup environment, meeting regulatory compliances pose several challenges due to the complexity and sheer volume of applicable laws and compliances. To assist startups in navigating these hurdles, we have compiled a list of laws applicable to startups. This document aims to provide clarity on regulatory requirements, helping young startups avoid compliance issues in the future.

Flow of the Toolkit

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The first step is identifying a legal structure for the startup.

Types of Legal Structures

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Once a startup has determined the most suitable registration structure for its business, it is essential to comply with the various regulations and legal requirements mandated by the government. In this section, we have outlined the key compliances for Private Limited Companies and Limited Liability Partnerships — the two most commonly chosen structures.

Private Limited versus Limited Liability Partnership

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Alongside legal compliances, businesses can also get government recognition by registering as a “startup”. Read this section to review the eligibility criteria and benefits of doing so.

Government recognition: Register as a ‘Startup’

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It is advisable for startups to proactively maintain templates for contracts and insurance policies to protect their interests, ensure financial stability, and enhance investor confidence. Read this section to go through suggested contracts and policies startups should consider having in place.

Contracts and Insurance Policies: Non-mandatory but essential to have it in place

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To successfully operate, Indian startups must navigate various regulations related to employees, data, intellectual property and taxation.

Other Relevant Compliances for Startups

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For additional information:

Glossary and References

For any queries, please reach out to [email protected].